Accelerators are now an integral part of the startup ecosystem. For some, especially first- time founders, it is becoming a checkbox— you have to go through an accelerator. Serial entrepreneurs, as a rule, would say they don’t need to, because they already know what to do.
Some people say that accelerators are only good for the companies that haven’t yet raised financing. They argue that if the company has raised capital, then it’s too far along for an accelerator and wouldn’t benefit from it.
My take is different; in my opinion, none of the above is universally true. We have plenty of successes at Techstars with companies who have raised funding, and there are plenty of serial entrepreneurs who have gone through the program. Increasingly, we see later-stage companies that have already achieved product/market fit really accelerate by going through Techstars.
Here is a breakdown of why you should join an accelerator (factoring in that I am a Managing Director at Techstars):
1. You are looking for mentorship & feedback
Quality mentorship is the secret sauce behind a great accelerator. Matching you with a network of top entrepreneurs, executives, and investors who share their experience and provide feedback and guidance can really accelerate your business.
Most often, the focus is the business itself—Is this the right product for the market? How can you achieve growth? What is the revenue model? Is this a big business? Is this business venture fundable?
You need to want to be mentored and seek the feedback. If you don’t think other people can add value or give you good feedback, then accelerators are probably not a fit for you.
2. You believe that your idea is an actual business
You believe you have a good idea and potentially a great business and you want to accelerate the discovery of whether this is true or not. You will do that via a ton of testing, getting customer feedback, talking to mentors and accelerator staff, and most importantly by setting goals and aggressively measuring progress.
You will do all of this with the goal to find product/market fit, and then step on the gas to get growth and prepare business for financing. That is, you compress what normally happens over much longer periods of time down to days and weeks. You essentially force yourself and your company through the process and that’s an awesome way to do it.
3. You are looking for business acceleration
If you already have traction and early product/market fit, you may benefit from business acceleration. Techstars, in particular, is known for its large, worldwide network that can connect your business with potential customers in a matter of hours.
By leveraging the network, you are short-cutting the lengthy business development process and rapidly accelerating your business. If your product is great, you can turn introductions into customers and quickly grow your revenue in a matter of weeks and months, while normally it would take months and years.
4. You are preparing for financing
Whether you are a first-time founder or a veteran, raising money is never easy. A good accelerator will prepare you for financing, not just by introducing you to investors—that’s the easy part—but by actually working with you to help ensure that you have an interesting, healthy, and defensible business.
You will work through the questions the investors will ask: What is the value here? Who are the customers? What are your traction and growth like? What’s your competition like? What is the market opportunity? What are the costs and revenue projections? What’s the hiring plan? What does this business look like at scale? All of these and many more questions get worked through to prepare you for funding.
5. You clicked with the Managing Director & accelerator crew
Accelerators are people too! Do you like the Managing Director and accelerator staff? If not, how are you going to spend 3+ months together?
Every VC would tell you how important the match between the CEO and VC is. This is because they get to work together in the boardroom for years. However, the match with the staff at an accelerator is even more critical. Let’s do the math: If you conduct a board meeting every 6 weeks for 5 years, that’s 43 days of half-day meetings. Even if you met twice this much, that’s fewer than 86 work days—still less than the amount of time you would spend with the Managing Director and staff at an accelerator.
Make sure you know and like the people you will work with.
6. You are clear on the value
In the same way that no two universities are the same, no two accelerators are alike. This isn’t an indication of good or bad, but rather different. How different? Well, that’s the whole point—do your homework and find out.
The last thing you want is to go in thinking you are going to get something and then come out without it. Be direct and specific—whatever you are looking for, ask during the interview process, “Would I get X out of your accelerator?”
Remember, any interview is a two-way street. And if the accelerator is not willing to answer your questions during the interview process, well, it’s probably not a great accelerator for you.
7. You understand the offer terms
The transactional part of going to accelerator is really important too. What are the terms? What do you get, and what do you give up? How much money are you getting? Is it equity or debt? What percentage of your company are you giving up? Is it common stock or preferred? What rights will preferred stock have?
If the accelerator does not take any equity, that’s fine, but it does create a looser relationship. On the other hand, some accelerators ask for too much equity, and it then becomes harder to further finance the business. Some accelerators have aggressive preferred stock asks, including senior class of stock and control terms. That’s not really market, but you might decide that you are okay with that. The key point is, understand what you are getting and what you are giving up.
8. You enjoy an intense environment and competition
Accelerator environments are typically really intense. At least at Techstars, the companies really Do More Faster, and it is amazing how much they accomplish in a short period of time. If the accelerator is laid back, well, then it’s not likely to accelerate you. Figure this out before you join. You do want a super intense, fast-paced environment that will leapfrog your company.
And you have to want to go through this experience with other startups. You learn a ton from each other and you also naturally compete. Whose made the biggest progress this week? Who landed the biggest client? Who has the most users? Who has the best pitch? It is a great natural competitive environment, but it is also the place to gain friends and business partners for life. Nothing else bonds founders like going through an accelerator together.
9. Alumni say it is AWESOME
Do your homework. Talk to the alumni. Did they enjoy the experience? If all of them say yes, ask what they got out of it. Why did they think it was valuable for their businesses?
If most alumni said it wasn’t a great experience, well, maybe you can then save yourself time and find a better accelerator.
10. Some of the reasons to NOT join an Accelerator
You are looking for immediate funding. Better accelerators give you around 100K, and while not a meaningless amount of money by any means, this should not be the sole reason for going to accelerator. It is like taking a job you don’t love just to get paid—it’s fine to do it, but not likely to make you happy.
You are looking to get into any accelerator. This is a bad idea for all the reasons we talked about above. Any accelerator won’t help you accelerate the business. Be deliberate, know what you want, and do not settle.
You are looking for co-founders. An accelerator is not really the place for this. It is very likely that you would be wasting the opportunity unless you have the right team already in place. Of course things happen, teams fall apart, and then you deal with it, but it’s different from deliberately going to accelerator to just find a co-founder.
You are looking for free space and free beer. Again, not a great idea (although I hear you on free beer!). You won’t be maximizing the value of the program without having a specific set of goals and objectives.
Hope this helps. If you have specific questions about your company and whether you would benefit from an accelerator, feel free to leave a comment or email me at [email protected].